California PAGA Compliance: What Construction Employers Must Know in 2026

California’s Private Attorneys General Act (PAGA) has long been one of the most significant legal risks for construction employers in the state. A single Labor Code violation affecting 100 employees could result in $10,000 in penalties per pay period—and that’s for just one violation. But the 2024 PAGA reforms fundamentally changed the landscape, creating new opportunities for employers who prioritize compliance.

Understanding PAGA and Its Impact on Construction

PAGA, enacted in 2004, allows employees to act as “private attorneys general” and file lawsuits against employers for California Labor Code violations. According to the California Labor and Workforce Development Agency, PAGA deputizes individuals to recover civil penalties that were previously only recoverable by the state.

For construction employers, PAGA exposure is particularly acute because of:

• Complex meal and rest break scheduling on job sites
• Multiple job classifications with different pay rates
• Remote work locations making time tracking challenging
• High employee turnover creating more potential plaintiffs
• Detailed wage statement requirements for prevailing wage work

The 2024 PAGA Reforms: AB 2288 and SB 92

On July 1, 2024, Governor Newsom signed landmark PAGA reform legislation (AB 2288 and SB 92) that significantly changed how PAGA claims work. These reforms took effect immediately for notices filed on or after June 19, 2024.

Stricter Standing Requirements

One of the most significant changes requires that PAGA plaintiffs must have “personally suffered each” specific Labor Code violation alleged in the representative action. Previously, an employee who suffered just one violation could sue for a wide array of other violations affecting coworkers. This change limits the scope of claims and gives employers more ability to challenge overbroad lawsuits.

Penalty Caps for Compliant Employers

The reforms introduced tiered penalty caps that reward employers who demonstrate good faith compliance efforts:

• 15% cap: If an employer took “all reasonable steps” to comply with the Labor Code before receiving a PAGA notice or records request
• 30% cap: If an employer takes “all reasonable steps” to come into compliance within 60 days after receiving a PAGA notice
• No penalties: If an employer has taken “all reasonable steps” and fully cures the violation
• $15 per pay period cap: If violations are cured but “reasonable steps” weren’t taken

What Qualifies as “Reasonable Steps”?

According to Liebert Cassidy Whitmore’s analysis, “all reasonable steps” includes:

• Conducting periodic payroll audits
• Taking action in response to audit findings
• Disseminating lawful written wage and hour policies
• Training supervisors on wage and hour compliance
• Taking corrective action with supervisors who violate policies

Expanded Cure Provisions

The 2024 reforms significantly expanded which violations can be cured to avoid penalties. According to Seyfarth Shaw, employers can now cure violations of:

• Labor Code § 226: Wage statement violations
• Labor Code § 226.7: Failure to pay meal/rest period premiums
• Labor Code § 510: Overtime violations
• Labor Code § 2802: Expense reimbursement violations

Special Cure Options for Smaller Employers

Beginning October 1, 2024, employers with fewer than 100 employees have 33 days from receipt of a PAGA notice to submit a confidential cure proposal to the Labor and Workforce Development Agency. This gives smaller contractors additional time and flexibility to address violations.

Reduced Penalties for Certain Violations

The reforms also reduced penalties in specific circumstances:

• $25 per pay period: For wage statement violations (§ 226) where employees could promptly and easily determine accurate information from the statement
• $50 per pay period: For any violation resulting from an “isolated, nonrecurring event” that didn’t extend beyond 30 consecutive days or four consecutive pay periods

However, employers acting in bad faith face increased penalties of $200 per subsequent violation if there’s been a prior court or agency determination of unlawful policies, or if conduct was malicious, fraudulent, or oppressive.

Meal and Rest Break Compliance: The Biggest PAGA Trigger

Meal and rest break violations remain among the most common PAGA claims, and construction sites present unique compliance challenges.

California’s Break Requirements

According to California Labor Law, nonexempt employees are entitled to:

• Meal breaks: An uninterrupted, 30-minute unpaid break for shifts over 5 hours; a second break for shifts over 10 hours
• Rest breaks: A paid 10-minute break for every 4 hours worked (or major fraction thereof)

Penalties Stack Quickly

If employees miss required breaks, they’re entitled to one hour of pay per day for missed meal breaks, plus an additional hour per day for missed rest breaks, a maximum of 2 hours premium pay per day. Under PAGA, these penalties multiply across all affected employees and pay periods.

The Rebuttable Presumption Problem

Following the California Supreme Court’s Donohue decision, time records showing missed, short, or late meal breaks create a rebuttable presumption of a violation. This means if your time records show a 25-minute meal break, you’re presumed to have violated the law unless you can prove otherwise.

As California Employment Law Report notes, employers should “periodically review time records for employees and follow-up with those who are not timely taking their meal periods.”

Construction Industry Exception

There’s good news for unionized construction employers. According to the California Department of Industrial Relations, Assembly Bill 1654 (2018) exempts employees in the construction industry from PAGA with respect to work performed under a collective bargaining agreement that meets specific statutory requirements.

This exception doesn’t apply to non-union construction work, making PAGA compliance even more critical for open-shop contractors.

Best Practices for PAGA Compliance

To take advantage of the new penalty caps and protect your business:

1. Conduct regular payroll audits: Review time and payroll records at least quarterly to identify and correct issues
2. Implement written policies: Document your meal break, rest break, overtime, and expense reimbursement policies
3. Train supervisors: Ensure foremen and superintendents understand break requirements and proper time recording
4. Use reliable time tracking: Digital time capture creates defensible records and flags potential violations
5. Document break opportunities: Have employees acknowledge that they received break opportunities and know how to report issues
6. Act on issues promptly: When you identify violations, correct them and document your corrective actions

Increased Employee Share of Penalties

The 2024 reforms increased the employee share of any PAGA award from 25% to 35%, with the remaining 65% going to the state. This increased incentive may encourage more employees to pursue PAGA claims, making proactive compliance even more important.

The Bottom Line

California’s PAGA reforms represent a significant shift that rewards employers who invest in compliance. According to CalChamber’s HR Watchdog, early data shows “employers have ramped up their compliance efforts, conducting audits more frequently while training managers and updating policies proactively.”

For construction employers, the message is clear: the cost of compliance is far less than the cost of PAGA penalties. Accurate time tracking, documented policies, supervisor training, and regular audits can now reduce your PAGA exposure by up to 85%—and potentially eliminate penalties entirely if you cure violations promptly.

The contractors who succeed in California treat PAGA compliance as a business priority, not an afterthought. The 2024 reforms give you the tools to protect your business—but only if you use them.

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Sources

• Private Attorneys General Act (PAGA) – California LWDA – PAGA overview and purpose
• Governor Newsom Signs PAGA Reform – 2024 PAGA reform signing announcement
• Governor Newsom Signs PAGA Reform Legislation – Liebert Cassidy Whitmore – Analysis of reasonable steps requirements
• PAGA Reform: AB 2288 and SB 92 Introduced – Seyfarth Shaw – Expanded cure provisions analysis
• California Meal Break & Rest Break Law (2026) – Meal and rest break requirements
• Five Compliance Reminders on Meal and Rest Breaks – Time record review best practices
• Private Attorneys General Act Filing – California DIR – Construction industry CBA exception
• PAGA Reforms Already Delivering Positive Results – CalChamber HR Watchdog – Early results of 2024 reforms